Colombia - 2005 Article IV Consultation and Fourth Review Under the Stand-By Arrangement, Requests for Waiver of Nonobservance of Performance Criteria and the Completion of the Fourth Review, and Request for Stand-By Arrangement--Staff Reports; Public Infor (Electronic book text)

1. The effects on macroeconomic and financial shocks on the banking system are of great interest to policymakers. Given the important linkages between the real and the financial sectors, particularly during volatile periods, a quantification of these effects may prove useful to anticipate potential changes in the level of risk faced by financial institutions. An option for estimating such effects is a modeling framework of banking system risk, combined with econometric models incorporating relevant macroeconomic and financial sector variables.